Thursday, July 28, 2011

Outside World

So how real are any of the proposed cuts, anyway?

Brad Plumer, now at Ezra Klein’s souped-up and even more must-read than before blog, had an excellent piece yesterday about whether a Congress can force a future Congress to stick to budget cuts or deficit targets. His answer, which I think is exactly right, is that well-designed procedures such as PAYGO rules to enforce widely agreed-upon targets can in fact work pretty well. He makes the excellent point that most of what Republicans are pushing right now wouldn’t fall under those categories. Indeed, that’s the real problem with the GOP debt limit blackmail strategy: even if they win now, the less there’s a consensus on what they win, the less the chance that the cuts will wind up being implemented.

I’d add a couple of things. One is that Plumer is mostly talking about discretionary spending. For programs which receive yearly funding in appropriations bills, Congress must act every year – and whatever the budget rules might be, strong Congressional preferences can relatively easily overcome any procedural safeguards. So what’s supposed to be cut this year could be very real, but once we get to the future, it’s a lot harder to know.

However, when it comes to entitlements, the logic works the other way around. Entitlements (sometimes called “mandatory” spending) simply are programs in which anyone who meets certain conditions is entitled to payment. If Congress never acts, they stay in place forever (the tax code works the same way; Congress doesn’t have to act to put next year’s income taxes into effect). So any entitlement changes enacted into law has a very good chance to stay in place for a very long time.

That’s really why those opposed to spending cuts are correct, I think, to focus mainly on entitlements. Not because discretionary spending isn’t important; indeed, one could make a strong argument that liberals should care more about the programs funded by yearly appropriations. But because once entitlement cuts are made, they’re really made. No matter what happens with discretionary spending now, the real decisions won’t be made until the actual fiscal year. And there will be many elections between now and then.


  1. I think it is important to note that Congress can't make anything more binding than that it would take passing a law to change that thing. And that future law could be to change the whole thing or just to make an exception for a particular measure (Congress really loves the latter approach in certain contexts). Things Congress does can be even less binding than that, but they can't be more binding.

    Of course having the legal status quo in your favor is no small thing in a political system with lots of veto points.

  2. Entitlements may stay cut - but that doesn't mean the budget stays more balanced. If the Republicans would take Senate and Presidency in 2012, I expect the Republicans would lower taxes again, probably "to boost the economy", and probably using reconciliation. And suddenly, deficits don't matter anymore.

  3. I'm concerned to see some liberals jump on the "don't cut Medicare, at all" bandwagon. Maybe that position makes tactical sense, but it's wrong. Medicare is the number one factor causing long-term deficits, so costs have to be reigned in somehow (even if somehow ought to mean single-payer health care rather than whatever the Republicans agree to).

    On the other hand, maybe liberals are just too honest. Republicans are not only more willing to take extreme positions but they will never let on that they're doing so as a negotiating tactic, even if they are (yeah yeah, I know, Iron Law of Politics and all that).

  4. I don't think it is a bad idea to suggest that this is the wrong context in which to be trying to control future Medicare costs. In fact I think it is reasonable to more or less wait and see how the various cost control measures in ACA are working, then come up with a comprehensive plan for more robust medical cost control using what we have learned.


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